Bithumb, South Korea’s second biggest cryptocurrency exchange, has announced plans to bring forward a new decentralized exchange in the coming months, in the wake of a similar move from rival Binance.
Bithumb DEX will target global cryptocurrency markets, and is being developed in partnership with One Root Network, which has already pioneered its own DEX which launched earlier this year, Business Korea reported.
According to sources close to the firm, the move is designed to compete with other cryptocurrency exchanges in targeting a global audience for the cryptocurrency brand.
The report noted, “Bithumb is one of the leading global exchanges in terms of transactions but it is true that most of its users are Korean. The latest decision seems to be the company’s strategy to compete with other leading exchanges in the global market by opening a decentralized exchange that receives attention in the global market.”
Cryptocurrency exchanges like Bithumb are traditionally been centralised, earning fees for the platform operator with each transaction. However, in the case of decentralised exchanges, the central party is removed from the transaction, with fees instead delivered by smart contract.
Discussing the scope for decentralised exchanges to become more prominent in future, Binance CEO Changpeng Zhao said that decentralised exchange technology would eventually overtake centralised exchanges.
“I believe that decentralized exchange is the future. I don’t know when that future will come yet. I think we’re at an early stage for that so I don’t know if it’s a year, two years, three years, or five years. I don’t know but we got to be ready for it,” Zhao told CNBC’s Crypto Trader.
Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission, said that investing through crypto exchange platforms required specialists knowledge many investors lack.
“This complexity means that only a very particular type of investor can pursue the diversification opportunities such assets can provide. Entrepreneurs are developing new products through which people can access cryptocurrencies indirectly or hedge their cryptocurrency holdings. Bitcoin futures, for example, began to trade recently,” Perice said.
Decentralised exchanges only exacerbate this issue, and as such, it is expected to appeal to Bithumb’s savvier customers. On the plus side, the decentralised exchange will improve security, by removing the centralised point of weakness—especially important in light of recent hacks of the Bithumb platform.
Although no specific timeline has been published, the new platform is expected to launch over the next few months.
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